Frequently asked questions about Florida title insurance, escrow and closing services

 

What is title insurance?

Title insurance insures against financial loss from defects in title to real property. Similar to fire insurance, it protects an owner or a lender against claims against the land. Title insurance was first developed in 1850 in Pennsylvania to protect buyers and lenders from defective property rights. It will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy. 
 

What services does a title company perform?

The title company handles the title search and escrow aspects of the transaction. They coordinate and act as the center point for the closing for buyers, sellers, lenders, realtors and 3rd parties such as surveyors, insurance companies and inspectors. Prior to closing, they put together all the pieces of the puzzle with the primary objective being to clear title and make sure all judgments, lien , encumbrances are satisfied at closing. The title company also prepares all closing documents, loan documents and any other legal documents related to the closing. Finally, buyers and sellers usually gather at the title company's office to sign and notarize all their documents. 

Here are some of the tasks a title company customarily handles:
  • Order title search
  • Title Examination by attorney or title agent
  • Tax search
  • Order mortgage payoffs
  • Order HOA/Condo Association maintenance and special assessment payoffs
  • Pay property taxes
  • Check for municipal liens (purchases only)
  • Check for code violations(purchases only)
  • Check for open permits (purchases only)
  • Prepare loan and mortgage documents (for loan transactions)
  • Prepare HUD
  • Payoff all mortgages, liens , judgments and HOA dues (if applicable)
  • Disburse funds
  • Record the deed and mortgage and all other necessary documents with the Clerk of the Court
  • Issue owners title insurance policy (approximately 8-12 weeks after closing)

 

Why does a buyer or a lender need title insurance?

When you purchase your home, how can you be sure that there are no problems with the home's title and that the seller really owns the property? Problems with the title can limit your use and enjoyment of the property, as well as bring financial loss. That is what a title search and the one-time expense of title insurance is for: 

Here are some common title problems:
  • Fraud & Forgery
  • Conflicting Wills
  • Missing Heirs
  • Incorrectly executed deeds by minors, corporations, heirs or non-entities
  • The seller has fraudulently sold the property to another recent buyer.
  • A prior seller has fraudulently sold the property to more than one buyer.
  • The seller purchased the property while committing mortgage fraud.
  • The boundaries may be incorrect and part of the property may actually be owned by an adjacent neighboring property owner.
  • There may be an easement burdening the property which limits the uses and thereby decreases the value of the property.
  • Structures on the property may encroach onto valid easements or an adjacent property.
  • There may be an older unrecorded deed transferring the property which is now recorded.
  • The seller or prior seller may have outstanding personal judgments which could attach to the property

What is a Closing Disclosure?

A Closing Disclosure is a five-page form that provides final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing costs).

The Closing Disclosure is a new form.  For most kinds of mortgages, borrowers who apply for a loan on or after October 3, 2015 will receive a Closing Disclosure.

The lender is required to give you the Closing Disclosure at least three business days before you close on the mortgage loan. This three-day window allows you time to compare your final terms and costs to those estimated in the Loan Estimate that you previously received from the lender. The three days also gives you time to ask your lender any questions before you go to the closing table

 

See a sample Closing Disclosure form with interactive tips and definitions.

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